Rivermead Business Park, Thatcham - Sold December 2015

A ten unit mixed business space estate extending to 25,000 sq ft purchased in October 2013 for £1.85million, with a £1million loan from Santander plus investor cash.

The estate is well-located immediately next to the railway station and with a prominent main road frontage. It comprises small office and warehouse units attractive to local businesses. Initial yield was 9.5% with scope to drive the return to 11% per annum on letting of the four vacant units. Purchase price represented £75 per sq ft – a little more than the cost of new build.

At the time of purchase there were five lease renewals outstanding, all of which were subsequently concluded. Three new lettings were secured following refurbishment of the vacant space (unfortunately, although not entirely unexpected, one tenant lost due to business failure). The last two vacant units were in legals for new lettings, at which point through Craigard’s agency contacts, a strong off -market off er of £2.5million was received from a specialist buyer.

Investors decided to accept after considerable debate. The offer reflected the enhanced income stream that was achieved, the improved building fabric through the refurbishments undertaken, but also yield shift, which was anticipated at the time of purchase. Investors achieved an annual return of about 25% over the two years of ownership.